Visa is a global e-commerce network technology company that has made fast, accurate and reliable electronic transactions possible in over 200 countries. We are building a global network of customers, vendors, financial institutions, corporations, strategic partners and government agencies to communicate money and information. VisaNet, our advanced electronic payment network business, provides a wide range of products, platforms and services to consumers, businesses and governments.
Its quarterly net income declined 22% year over year to $2,373 million. COVID-19 continues to affect the economy globally, and our business performance is also difficult to predict. The company's top priorities are our employees, our customers, and the communities in which we live and work. It is taking prudent steps to ensure its employees return to work for the remainder of 2020. In parallel with telecommuting, measures are being taken to ensure that you can work with as much distance as possible.
In the third quarter of 2020, sales are expected to decline due to a decrease in card payments and transactions. The economic contraction appears to be due to social distancing, self-isolation, and city closure. Cross-border payments are still unrecoverable as the number of trips has declined significantly.
It is taking steps to reduce operating costs by revising its hiring plans, restricting travel, and reducing marketing costs. Operating expenses for the second quarter of 2020 were $1.8 billion, down 5% year-on-year.
You can see that sales by all sectors have decreased. Looking at the table on the left, total sales declined 17% on a quarterly basis compared to the same period last year.
Service sector sales are a business that generates sales in the form of receiving a fee for the amount using the electronic payment network. This is a modest level compared to the same period last year.
Data processing revenue is a service that provides valuable data for individuals, companies, financial institutions, and other entities using our services. Sales decreased by 5% compared to the same period last year.
The sector with the largest decline was International trasation revenues, referring to cross-border transactions, which fell 44% as global travel volume plummeted.
Other sales declined 8% compared to the same period last year due to reduced profits from marketing services and travel-related cards.
This is a table of sales increase and decrease by region. The share of sales in the US accounts for about 43% and the rest comes from other countries. Sales in the US fell 8% on a quarterly basis compared to the same period last year, while sales at International plunged to 24%. It appears to be the effect of a decline in sales in the cross-border transaction sector.
It is a table of increase and decrease of operating expenses. Personnel costs increased by 8% on a quarterly basis compared to the same period last year due to the hiring of personnel to plan our investment strategy for future growth.
Marketing costs were lowered by 38% to meet our goal of reducing operating costs. Marketing costs have been reduced due to the cancellation of the FIFA Women's World Cup and the postponement of the Tokyo Olympics.
Professional costs have also been reduced by 16% to meet its operating cost reduction targets.
Depreciation and installment expenses increased by 19% due to its investments, including mergers and acquisitions.
Other costs were also lowered to the goal of reducing operating costs.
Operating activity cash flow declined from the same period last year for nine months ending June 30, 2020. During that period, it appears to have declined due to increased customer incentives. Reduced tax expenditure and litigation costs offset some of the decline.
Cash flows from investing activities increased year over year. This is the effect of less cash going out of investing activities over the same period.
Financial activity cash flows declined year-over-year. It is the effect of the elimination of senior debt payments and deferred purchase payments during that period. Share buybacks and high dividends over the same period offset the decline.
The figure on the left is Visa, and the figure on the right is the industry average. Its ROE remains high at around 29%. The average 5-year EPS growth rate is 19.8%, which is higher than that of other business groups. The current ratio is 1.55, and the short-term debt repayment capacity is sound. LT Debt to Equity is 50.33%, so the debt payment ability is very good. Asset turnover is 0.31, lower than the industry average. Dividends are paid quarterly, and dividends have not been cut or stopped since 2010. The dividend growth rate is very high at 21.32%.
Visa is a master card and monopoly company that provides global card payment network services. Despite the emergence of various electronic payment service companies, there are no companies that can replace card payment network services. Paypal is the only company that offers a service that does not use the card payment network Visa provides. However, most of the world's card payments are using the payment network it provides. Therefore, Visa's overwhelming market share is expected to remain in the future. In addition, the enormous amount of customer data that the company is processing can lead to a high value-added service business, so it is worth looking forward to future growth.
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